Entrepreneurs often find themselves in high-stakes negotiations with big, savvy players, with significant negotiating power (referred to herein as “Big Boys”) — whether it be a venture capital firm in connection with a financing or a private equity firm in connection with the sale of the entrepreneur’s business; the situation can indeed be daunting. Below are ten tips for entrepreneurs to help them through this process.

1. Retain a Strong Team. In dealmaking as in business, you are only as good as your team. Accordingly, the first step for the entrepreneur is to retain a strong transaction team — and the quarterback of the team should be an experienced corporate lawyer. Indeed, an experienced corporate lawyer will not only add value to the transaction, but also can help the entrepreneur build-out the team and tailor it to the particular deal (e.g., in an acquisition, a strong tax lawyer is imperative to help structure the deal or in a licensing transaction, a strong IP lawyer is often necessary, etc.). The Big Boys are generally represented by large, aggressive law firms, and the entrepreneur must ensure that his/her team is up to the task.

2. Do Your Diligence. Due diligence is often a critical component to any deal. One form of diligence that is often overlooked, however, is an investigation of the guys on the other side of the table. What’s the reputation of the Big Boy — e.g., is this a venture capital or private equity firm that treats its portfolio companies well or is this a firm that squeezes the little guy? What about the particular individuals with whom you are dealing? What are their reputations? Are they good guys with whom to partner or are they jerks? Indeed, the web is a good starting point for the entrepreneur who needs background information on a particular firm/individual. At a minimum, the entrepreneur should track down other entrepreneurs or CEO’s who have done deals with the guys on the other side of the table and make an informed judgment as to whether they are guys with whom the entrepreneur wants to do business.

3. Create a Competitive Environment. There is nothing that will give the entrepreneur more leverage in connection with any negotiation with a Big Boy than a competitive environment (or the perception of same). Indeed, every investment banker worth his salt understands this simple proposition. Accordingly, a start-up seeking a Series A round financing from a venture capital firm, for example, will clearly be more appealing if such firm learns that other venture capital firms are interested in the start-up. Not only does competition validate a firm’s thinking, but also it appeals to the human nature of the individuals involved. Indeed, everyone wants what he doesn’t have and/or what someone else wants. The entrepreneur will have strong leverage with respect to price and other material terms as competitors are played off of each other and will thus strike the best possible deal. One caveat: as discussed below, it is probably best left to a strong corporate lawyer to play this game on behalf of the entrepreneur; indeed, this strategy must be played carefully and is better-handled by someone with experience.

4. Run the Negotiations Through the Lawyers. The entrepreneur should do what he does best — i.e., build companies — and leave the negotiating to a strong corporate lawyer. Entrepreneurs are generally no match for sophisticated venture capitalists or private equity or corporate development guys who do deals for a living. Accordingly, a smart entrepreneur will stay above the fray and let his corporate lawyer run the deal. The Big Boys may try to do an end-run around the entrepreneur’s lawyer (and may even criticize the lawyer and try to turn the entrepreneur against him), but the entrepreneur should remain disciplined and avoid “side-bar” negotiations with the principal(s) on the other side. This approach is particularly important where the entrepreneur will have an ongoing relationship with the other side post-closing; the goal is thus not to poison that relationship with testy, acrimonious negotiations (i.e., let the lawyers fight it out).

5. Develop a Game Plan. Every deal is different — different players, different negotiating leverage, different risks, different timing — and it is thus critical that the entrepreneur sit down with his transaction team and strategize; in short, he must develop a game plan and then attempt to execute the plan. Indeed, doing deals is no different than any other project: the entrepreneur must think through the issues with a smart, experienced team, set reasonable milestones and then monitor the progress. Rigorous analysis throughout this process is paramount.

6. Be Careful with LOI’s. A letter of intent (an “LOI”) — sometimes referred to as a term sheet or memorandum of understanding — is often executed in connection with all types of deals. The entrepreneur must understand that, depending on the deal and the context, there are different LOI strategies and considerations that must be addressed. For example, in the acquisition context, a selling entrepreneur should try to negotiate all of the material terms of the deal in the LOI when the entrepreneur’s leverage is the strongest; on the other hand, a buying entrepreneur’s main goal with respect to the LOI is merely to lock-up the seller and prohibit it from shopping the deal for a reasonable period of time. Another major concern with respect to LOI’s is that they may be deemed enforceable by a court of law (i.e., be deemed a binding agreement) — despite express language in the LOI to the contrary. The lesson here is simple: an LOI should not be executed without the advice of competent counsel.

7. Check Your Emotions at the Door. Big Boys are masters at taking their emotions out of transactions and being extremely disciplined. Indeed, Big Boys will generally walk from a deal if they get out of their comfort zone (e.g., with respect to the risk profile, price, etc.) — regardless of how much time and money they have expended. Entrepreneurs, on the other hand (particularly those who haven’t had much deal experience), often become emotionally wedded to a particular transaction and are unable to maintain their objectivity the further along they get in the process. Too often, an entrepreneur will fall in love with a particular deal — like the first-time home buyer — which will lead to poor decision-making and risky positions. (“I don’t care if it has termites or there is a cesspool problem, I love this house” becomes “I don’t care if I must personally guarantee all of the reps and warranties without a cap on liability, I love this deal.”) It is critical that the entrepreneur understand this dynamic and address it accordingly.

8. Don’t Blink First. There comes a point in time in just about every deal where both sides have dug into certain positions and the question becomes which side will blink first; e.g., in a venture capital financing, perhaps the issue is control of the board or, in an acquisition, perhaps the issue is carve-outs to the cap on liability. Whatever the issue, the lesson for the entrepreneur is clear (albeit difficult to execute): in order to maintain negotiating leverage and credibility, the entrepreneur should try not to blink first. Indeed, if the entrepreneur has flatly stated that “this issue is a dealbreaker”, but then blinks and nevertheless agrees to go forward with the transaction despite not getting what he asked for, he will have completely undermined his credibility and will have his clock cleaned with respect to any other significant issues. Like poker, if your bluff gets called, it will be difficult to bluff again. Which brings us back to the important tip in #4 above: run the negotiations through an experienced corporate lawyer who does this stuff for a living.

9. Watch-out for the “Good-Cop, Bad-Cop” Routine. Big Boys employ all kinds of negotiating games, and one of their favorites is the “good-cop, bad-cop” routine. The Big Boy, of course, plays the good cop and is smooth, friendly and agreeable and makes the entrepreneur feel like all of his important issues are being taken care of. But then the documents arrive — chock full of bells and whistles and boilerplate provisions designed to protect the Big Boy and often with significant gaps on the deal points. When the Big Boy is questioned as to what’s going on here, the answer, of course, is “it’s my lawyer’s fault” (i.e., the “bad cop”). This game will continue throughout the negotiating process as the Big Boy charms the entrepreneur while his lawyers pound away on every significant issue.

10. Hire an Aggressive Corporate Lawyer to Watch Your Back. As a corporate lawyer at two major New York law firms, I have learned first-hand the importance of watching my clients’ back. Indeed, I have worked on billion-dollar deals where, prior to signing, emotions run high (as discussed above), and a few of the significant risks are minimized or pushed-aside by investment bankers and/or business guys in order to get the deals done. My job, probably more important than anything, is to sober the entrepreneur and lay-out all of the significant legal risks — and then push hard to negotiate appropriate protections. If the deal sours and lawsuits are filed, well-drafted documents become like an insurance policy to the entrepreneur — and what entrepreneur doesn’t have insurance?

To become a successful entrepreneur takes failure. You have to be willing to accept it and learn to make yourself better. Through experience and knowledge you will find making a certain business entity successful, as opposed to failing, is much easier to create.

When you are an entrepreneur, you are constantly learning. You are constantly looking up new things on how to add to your business. It is important that you are logical on who feeds you information, because you can find yourself in traps that are hard to get out of.

Let me give you an example as it has happened to many people who are trying to become an entrepreneur. The internet world is often times misunderstood. This leaves a gray area for sales representatives from other companies to take advantage of you. The most important thing that any business needs is leads. People to talk to and potentially buy their product. These sales reps operating in this gray area are very aware of this concept and modify their pitch to reflect how successful you will be. This shifts the attention from the work that is actually being done to what could possibly be obtained. So to get to the example, it is not uncommon for someone to be paying $1,000 a month for search engine optimization to be done. However, some companies can put your company in severe risk if they are not following guidelines that are implemented and banned from sources like Google. There are many businesses out there who have shelled out tons of cash only to find their site banned a couple of months down the road.

So the first thing to do when you are looking to be a successful entrepreneur is to become aware of what works and what does not. There are trustworthy sites that you can go to get your information. When you are looking for information, look for sites that have a.gov attached to them or a reference to the actual business you are addressing like Google.

The list can go on and on, but look at the difference in who is feeding you information as opposed to a company who is just trying to sell you their product. This will most definitely save you time, energy, aggravation, and money in the long run. Read up on some material and pretend that you know what you are talking about. If you know more than the sales rep, then it is probably not the best solution for your business. If they can take a concept and explain it more in depth, then they are most likely a better company to work with. The companies who create results will take the time to educate their employees. The companies who are interested in only your money do not really care what the sales rep says to get the deal.

So the number one thing is to be aware that these things exist and to be precautionary moving forward with them. Even if you have everything else running perfectly, these mistakes can put you out of business.

Another important factor to mention is, “If it’s not broke, don’t fix it.” When you are first starting a business, you often times have ideas on what will work. The only problem is that you have no data to backup your statements. There is a time to try and a time to copy. Most successful entrepreneurs will start to work off of a strategy that they know creates results and then build off of that after they have money coming in. Most of the time, there is another business out there just like yours. They offer very similar products and have the same market to compete in. Take the time to look into their strategies. Find out what is working and what is not. This will be the shortest way to actually get the business rolling.

No matter what business model you decide to take on, the most important thing for any entrepreneur is to remain active. This is your lifeline and no one else’s. You cannot sit back and rely on someone to do everything for you. You need to engage yourself in the business every single day until it is operating how you need it to. At that point, you will have the opportunity to sit back and enjoy. It’s important that you are honest with yourself and what you are willing to do to achieve your success. Otherwise, you will try to cast blame unto others and be left with a failing business.

There are other articles out there that can help guide you on if becoming an entrepreneur is the right decision for you. Once again, be completely honest when you are answering the questions. Some people think they want to be an entrepreneur, but don’t have the drive or the capability of actually doing it. This leaves them in a worse position than sticking to their normal routine of 9-5 with a company.

There are certainly other factors to consider when looking to become an entrepreneur, such as legal business filing and merchant accounts, but these sources and mindset will help lead you in the right direction. We are certainly here to help guide you through the process as well. Please feel free to click on the link below and we are more than happy to work with you in creating your dreams.

Scores of entrepreneurs and solo-professionals flying like lemmings off a financial cliff, creating information products doomed to failure right from the start.

They pour time and effort into products that have no chance for success. And become discouraged, never to try again, missing out on tens of thousands of dollars of potential profits.

However, you can avoid that fate by answering 3 simple questions:

1. Should I be creating this product in the first place?

Everyone assumes just because some hot-shot is making money with a product that they can too. However, nothing could be further from the truth.

Is there a demand for the product amongst your target market? Does it fulfill a desire or an urgent want or hunger they have? Does it leverage your unique expertise and viewpoint?

If not, you are staring into a bottomless pit that will suck your time and energy and give nothing in return.

The your prospects won’t buy anything that doesn’t meet their needs.

On the other hand when you answer yes to the questions above, you are well on your way to creating a hit.

2. Why am I creating this product?

Lots of folks often ask me “How do I create my product?” And rather than give them a pat answer, I always answer their question with one of my own: “Why do you want to create this product?”

A blank stare in return means that I have just saved them from an expensive boondoggle.

Your product must fulfill an important specific goal for your own business: more revenue, more subscribers, more exposure. It’s the only way to insure your production and marketing stays on track, on schedule and on target to reap the result you want.

Here is a very crucial bonus tip:

The more specific you can be about your product goal, the more likely you are to achieve it. How much revenue do you want it to produce? Over what period of time? How many new subscribers? How soon?

Getting specific can radically explode your chances for success. Without it, you are simply shooting in the dark.

3. Are you doing this because you want to, or because some marketing guru said you have to?

It sounds sentimental and syrupy sweet. But its true:

The more passionate you are about creating your product, the better the chance you will see it all the way through to its profitable completion.

The fire that creates a successful product must come from you. It’s the one thing you can’t get from a home study course. And if it isn’t there, your prospects instinctively know it. And a lack of sales will show it.

So are you creating your product because you want to? Because you are passionate about the material? Because you know there is nothing like it out there, and that your target market desperately wants it?

Or are you doing it simply because some hot-shot guru said you should?

The factors that create successful products are largely hidden and misunderstood. However, you now know three that save your own efforts from the scrap heap, and help insure one profitable success story after another.

The entrepreneur is a different animal to your average coaching client. They are futurists and have the capacity to see opportunities where others cannot. They are highly creative and are strategic thinkers. They operate best free of constraints. They are impulsive and risk takers. The opportunity will often outweigh the risk. Their impetuosity and spontaneity often leaving a trail for others to clean up. They love to have multiple ideas or projects on the go. They thrive on starting things and can quickly become bored. They often work best alone. They move at a rapid pace. They may experience frustration if those around them cannot keep up.

What common mistakes do coaches make with entrepreneurs?

Don’t try to change them or slow them down

Successful coaches appreciate the entrepreneur for who they are and don’t try to change them. Let them run and get out of their way. Watch and learn. They move at such rapid pace they may omit to consider risks or challenges. Help them expand their thinking, use brainstorming techniques, run scenarios, add clarity and detail to the vision, identify blind spots.

Preserve balance and sustainability

In their haste the entrepreneur may neglect basic aspects of their lives, eg diet, exercise, relationships, birthdays. Watch out for sustained periods of neglect. They are optimists and masters of illusion. Look for hidden signs of stress. The entrepreneur has the capacity to make small things big things – both opportunities and problems. Call it gearing. A good coach will realise this and role-play whatever role is appropriate. This is an art.

Respect their creativity and risk threshold

Entrepreneurs have a high threshold for risk. Accept it and work with them. You may need to be the flexible one. Their tolerance for risk, not yours, should determine the basis for strategies and objectives. Entrepreneurs love to brainstorm ideas. They also love to talk. So, let them. Coaching is about listening. Entrepreneurs want someone to listen and respond enthusiastically to their ideas. They seek positive reinforcement.

What advice would you give to public practitioners dealing with entrepreneurs?

Much of the above is also true for the professional advisor. There is one basic distinction. True coaches will not give advice. They will facilitate self-discovery through questioning techniques. Professional advisors such as accountants are expected to give professional advice. They are subject matter experts and required to interpret the law and share their knowledge. Remember entrepreneurs are the decision makers so offer them your considered opinion and let them decide. Give them options.

Be proactive

Entrepreneurs move fast. They subject themselves to risks and make frequent decisions. They do not and cannot know everything. They place a premium value on astute professional advisors who can give them considered opinion proactively and foresee scenarios or risk exposure they cannot.

Be accessible and responsive

When entrepreneurs want an answer they want it now. They make rapid fire decisions and have short concentration spans. They don’t want to dwell on the detail. Big picture, clear guidance, fast turnaround.

Service focus

Tune into what your client wants. Take time to learn how they tick. Be flexible with your communication style to accommodate your client. They talk fast, you talk fast. They want succinct information, give it to them. They want options, run scenarios. They expect you to be there when they need you not return my call two days later.

Questions are the answers

Learn how to listen. Learn how to ask powerful questions. The techniques of a skilled coach are just as relevant for an accountant or sales professional. Ask open questions, eg what, where, when, how. Practise questioning techniques such as probing, clarifying, paraphrasing, summarising.

Restate commitments

Once you have reached agreement with your client, repeat it back to them for clarity, “So, it is my understanding that you want me to submit your tax return by Monday, 31 July, is that correct?” or “My expectation is that you will sign and return the contract to me by Wednesday, is that reasonable?”

Real-time information

Nothing irritates an entrepreneur more than old information. Time is money. They want both lead indicators (prospects, conversion rates, average sales, purchase frequency) and lag indicators (customers, sales, profits) in their management reports. Sales pipelines are essential management information.

System and structure

The entrepreneur needs system and structure. They often aren’t the best person to deliver it. That’s why they hire a coach, personal assistant, consultant or accountant.

Coaching an entrepreneur is an exhilarating and rewarding experience. It can be a roller coaster ride and is never a dull moment. Supporting them in your role as a public practitioner can be just as rewarding. So, get yourself ready and hang on for the ride of your life.